Tuesday, March 27, 2012

After listening to the oral arguments before the Supreme Court of the United States (Scotus), I think it's quite possible that Scotus could rule as follows:

(1) The individual mandate as a federal requirement to buy health insurance is possibly unconstitutional as a regulation of commerce but the penalty tax that enforces the mandate is possibly saved by the Congress's power of taxation.

(2) The issue of the Congress's power of taxation is blocked from consideration by the anti-injunction act and can't be litigated until after the penalty tax is assessed and paid.

In other words, Obamacare may be halfway unconstitutional. Scotus might say it is inclined to find the mandate is unconstitutional, but since their constitutional rulings should be as narrow as possible, they can't issue that ruling until the penalty tax can be properly considered.

And when would that be? The penalty tax does not take effect until January 1, 2014. Income tax returns for 2014 are not due until April 15, 2015. It has taken two years for the current case to make it to Scotus, so a refund case might not get to Scotus until April 2017. That would be after the next election in 2016 so we don't even know who will be President then. Republicans are promising to repeal the law long before then. That would make the constitutional challenge moot.

So how will they settle the bets on Intrade? Currently, Intrade is quoting a 55% chance on Scotus to rule individual mandate unconstitutional before midnight ET 31 Dec 2012 and a 61% chance on Scotus to rule individual mandate unconstitutional before midnight ET 31 Dec 2013.